French businesses ‘hoping for a new Thatcher’

With the government in turmoil and the country’s economy in the doldrums, the mood at a gathering of thousands of French business leaders on Wednesday was a mix of frustration and cautious optimism.

For six months now, the French economy has remained at a standstill, growth forecasts have been slashed, unemployment has soared to record highs and the public deficit has ballooned well above national and EU targets.

The French government seems to have decided it's time to take action.

At the annual meeting of members of France’s Medef employers’ federation on Wednesday, Prime Minister Manuel Valls outlined the government’s new pro-business stance in unequivocal terms and completed a U-turn from the leftist financial policies that swept Socialist President François Hollande to power in 2012.

“Entrepreneurs, France needs you,” he said to much applause. “I love business,” he added.

"I know that the [political] left and the business world are customarily opposed; it's an old tune. But I deeply believe that our country needs to shake off this position, these role-plays that we are so used to," said Valls.

"It has made us lose too much time, and our country is dying because of these positions."

Just talk?

Outside the auditorium, chatter among the business owners, executives and entrepreneurs that make up Medef’s members centred on whether the change of tack from the government they had been asking for so long was really here, or just an illusion.

“Personally, I’m feeling positive,” said Guillaume Belhommet, director of Sensus Marketing, a start-up based near Nantes in western France.

“I’m optimistic because the reaction of our government has been positive. As Mr Valls said, the engine of the economy, which are the companies, have to be liberated, the government understands they need to change.”

Valls: France needs its businesses

However, not everyone is convinced by the government’s new business-friendly approach. Some wonder if it may be a case of lots of talk, but little action.

“Valls clearly has a new way of talking,” said Gilles Richard, managing director of the UFCC employers’ federation for the chemical industry. “But a couple of years ago he was saying the opposite. There’s no way to know if it’s real or just talk, if it’s just political.”

‘We are hoping for a French Thatcher’

Valls’ speech came just two days after the government was plunged into a crisis described as the lowest point in Hollande’s tenure. It came when his then-Economy Minister Arnaud Montebourg let rip on the government’s gradual switch to austerity-driven, increasingly pro-business economic policies.

Among his gripes was Hollande’s ‘responsibility pact’ – a host of measures unveiled earlier this year which include tax-breaks for companies that hire new workers and 50 billion euros worth of spending cuts.

The choice to replace Montebourg was telling. The veteran left-wing firebrand has made way for 36-year-old former banker Emmanuel Macron, another move aimed at sending out a clear pro-business message.

Xavier Galezowski, a senior consultant at Ernst and Young, believes the government’s change of heart is a “clear signal that the left is reconsidering the fact that they have to be pragmatic” when it comes to businesses and the economy.

“There is too much ideology,” he says. “French people have had enough of ideology. We just hope it’s not only words.”

Even if the government does follow through on its promises, it may not be enough, Galezowski believes.

“Cutting taxes, for example, is a good sign, but my only worry is that we won’t go fast enough, or far enough."

“I think that in many ways we are hoping to have someone like Margaret Thatcher in France,” he says, referring to the Britain’s “Iron Lady” Prime Minister famous for her policies of economic deregulation, privatisation and decreasing the power of trade unions.

‘Don’t expect anything from the government’

In his speech Valls stressed the importance of small businesses to the French economy in particular.

“These are the businesses that create jobs,” he said. “And we are lucky in France to have one of the most dynamic pools of start-up businesses in the world.”

But some owners of such companies feel the government is doing more to hinder, rather than help, their progress.

As much as tax breaks and deficit reduction are welcome, what’s really needed is consistency in government policy, says Caroline Geraud, director of My Web Marketing, a company based near Montpellier in southern France.

“It’s not our job to follow every change in government financial policy. We spend so much time learning new policies and then they change again.”

She is not getting carried away with the new business-friendly rhetoric of Valls and Hollande.

“As a business owner, you shouldn’t expect anything from the government in France,” says Geraud.

“It’s better just to concentrate on your own customers, your own business. [Anything else they might do for us] is a bonus.”